Month: May 2015

Ever thought what happens behind the curtains before a new product hits the shelf? Or what makes customers decide they love product A but definitely hate product B, although they are almost identical? Or what makes great products … well … great?

Many have and there is no clear answer to these questions. What works when Apple launches a music player may not work when Microsoft does it (Remember Zune?). There are many variables involved and no matter the size of your R&D budget, sometimes things are not going to go right.

But there’s only one way to see if the product is really fit for the market. That way used to be simple and a bit risky. Teams including marketing, product development, engineering and manufacturing experts would dream, design and build products. They would test the products on selected customer groups and if the results would look good, they would push the product to the market.

Jamstick is a “portable guitar that teaches you to play”. It asked for $50.000 in crowd-funding. It received $792.000. Jamstick is a pretail success.

Two things changed this: crowd-sourcing and crowd-founding. Together they’ve formed a type of customer experience previously unknown: the pretail.

Testing the waters with crowd-sourcing and crowd-founding

In the past, teams were involved in trying to guess what customers would want. Now we can just go ahead and ask the them.

Pretailing is a term describing any activity introducing customers to brands or products, before the retail process. It assumes that using crowd-founding sites such as Kickstarter, inventors and innovators can test their concept before involving big budgets. Essentially they are asking potential buyers to invest their dollar-power in their product.

This, in turn, creates an experience previously unknown to the consumer. The consumer is effectively buying into a vision. Pretailing creates a new type of sales channel that works before the product is even manufactured. Unlike traditional retail, this type of commerce can shed light on what the market wants at any given time.

Pluck is a simple egg-separator and it was invented by Mark Fusco, a Quirky member.

Online stores such as Quirky, Threadless or Japan-based Muji have one thing in common. They use their communities to find the right ideas and products to design and develop. Quirky is focused on inventing cool gadgets, Threadless leverages its designer community to create t-shirts and Muji sells home&deco products designed by the consumers.

They all engage in pretailing. By tapping into the collective minds of their communities they can ask for the type of products most customers would purchase. Before they manufacture and sell, they ask what to manufacture and sell. This in turn creates a sense of belonging to the community for the customer. For the retailer, it decreases the risk of manufacturing and stocking up on lousy products.

Crowd-founding is another way of tapping into the market and pretailing. We all know Kickstarter but other, more product-oriented crowd founding platforms fare even better for this concept.

The results are amazing. With unlimited creativity comes an unlimited supply of innovation. And by tapping into a large market of early-adopters, only the products that are really fit for distribution get funded and survive.

Crowdfunding exploded after 2011.

Big retailers have picked up on the trend and are now using pretailing to test new products and improve their logistics to fit the estimated demand. Apple, for example is one of the companies that showcases products before they are available in retail stores, interacting with developers and customers to improve the experience.

Pretailing is a thing of the crowds

Beyond the crowd-founding and crowd-sourcing, pretailing can come from anything involving large numbers of potential customers. By tapping into online traces, retailers can get insights on potentially succesful products.

Pretailing can start with a simple research with Google Trends. It can be an analysis on the search trends on your own web store.

Who would have known? Apparently there is a growing demand for egg separators.

It can just as well be an overview of the most popular trends on Instagram. For example Crane & Canopy releases new high quality duvets basing their decisions on Pinterest and social media trends.

The conclusion is that in this highly competitive market, retailers need to engage their customers before they start the retail process. Pretailing means tapping into the wisdom of the crowds and extracting the perfect products before competitors do. It is not only a matter of product development but a matter of understanding the customer and providing the best experience on the market.

We expect historic changes to be a bit dramatic. We think of “Evrika!” moments when inventors discover new technologies that make our lives better.

The reality, however, seems to sneak up on us. We now know how important the Internet is but few would have guessed it when it was used to exchange short bits of information between academics. Same for Google – it is now easy to see how important having the global stream of information at your fingertips actually is. But it was a lot harder when the concept was still in its infancy.

Not even Steve Jobs could have predicted the impact the iPhone would have on the world. And I believe Elon Musk will look back on these days and be surprised by the changes Tesla brought to the world.

When Elon Musk announced the Powerwall, the world shook a little bit. Its beautiful design and promise of energy independence seemed almost dreamlike. But the Powerwall shows a far larger vision than just making the home energy independent.

It is a promise that we could harness the virtually unlimited energy of the Sun and store it. Storage, you see, is the real problem. The complex systems we use are powered by energy that is consumed almost instantly. Our cars, our electronics, our planes – they feed on streams of energy as it is formed. Even the best energy storage systems fail after a short while.

The batteries that can save the world

The promise that one day a company (could it be Tesla?) can find a way to harness and store the sun’s energy (or any type of green energy for that matter) has an impact we can hardly predict.

The implications range from pollution reduction to geopolitics to economics. Especially economics. To understand how much we could save by switching to green energy, have a look at this estimate for an average Tesla car compared to one running on fossil fuel:

Think that’s a lot? That car “only” logs 120 000 miles. Compare that to the 397.8 billion miles logged by all trucks used for business purposes (excluding government and farm). In the US alone.

Now mix the numbers and add the savings Tesla’s technology can bring.

Add something else: sun-powered electricity. Think of trucks and ships that can move goods around without any need for refueling.

Because that’s where the real change comes in. When products are manufactured and shipped at a tiny fraction of what they are today, everything changes.

When we take out the distribution costs, the energy costs and any other costs associated with energy from our current commerce paradigm, everything changes in the world.

The products we buy would have costs that would be driven to the ground. Without costs associated with energy consumption and storage, goods would be manufactured cheaper and faster (instant energy), shipped cheaper and faster and consumed by more. We could have cheaper products, consumed by more and believe it or not, more profitable to sell.

But how could the system change?

There is only one thing stopping this: the current transportation and energy system. Musk’s vision has already stirred things a bit with car dealers. What happens when the company will go against the global leaders in energy and transport companies, the ones still relying on fossil fuels? These companies would have to change or fight the change. The former is what one might expect.

That’s where the Uber concept comes in. Uber connects, as you know, smaller professionals that provide transportation services. Right now this is limited to personal transportation. Uber, today’s Uber, acts as a glorified cab dispatcher.

But tomorrow’s Uber may have bigger ambitions. Somewhere behind the scenes, investors know that there’s more to Uber than meets the eye. The reason the company landed a $41 billion valuation is that it has the potential to change the global transportation system. Not just personal transportation but all kinds of transportation.

That includes making sure goods are quickly moved from manufacturing to storage to the consumer. Don’t take my word for it. Uber has been experimenting time and again with logistics. And if Uber won’t, there are other companies that will.

So you have virtually unlimited power. You have storage. You have the a system that makes sure goods are sent to the right destination by the optimum freight. This means the kind of change we now can’t fully comprehend.